With Exclusive Interviews and Incisive Insights, B&E brings The Annual listing of India’s top wealth Creators during The Financial year 2010-2011; Companies that gave The Largest Rise in Market Capitalisation for their Shareholders!
However, considering that this is just the beginning of an even slower growth year, companies need to sharpen their input-cost-reduction strategies than focus on price discounting moves. At the same time they must not forget what Richard Zeckhauser, Professor of Political Economy, Kennedy School, Harvard University has to say. As per him, “Learning to invest more wisely in an unknown and unknowable world may be the most promising way to significantly bolster your prosperity.” Historically, a phase of recovery, which invariably is marked by slow growth, brings in a plethora of opportunities for the companies in form of new trends. Though many companies miss on the opportunities by underestimating them for the time that these trends take to build up before take off, the companies which hold on to these opportunities finally manage to pay their shareholders higher than others. BCG, which has been tracking 78 such trends (called megatrends) since 2005, reports, “Nearly 80% of those trends managed to grow during the downturn – with 23 actually strengthening in importance.” Last year, it also estimated that 44% of those megatrends represent a global market size of over $500 billion. So spotting such new and potential trends and making full use of them would be the idea that should be taken very carefully by India Inc. to stay in the race of the India’s biggest wealth creators for FY 2012.
But then, that alone will not suffice. As a natural add on to a slow-growth economy, as we mentioned above, the companies are bound to feel the pressure on their bottomlines. Hence, a comprehensive and fluent pricing policy and equally good implementation of the same is of utmost importance. To keep their topline steady during the prevailing slow demand conditions, companies may get tempted to adopt a discounted price model, but in the long run, this could hurt them more as revenue, apparently, is the single most important driver of shareholder value maximisation. A research conducted on S&P 500 companies suggests that while in a 3-year horizon, revenue growth carries a 50% importance in overall value creation, in a 5-year horizon, it amounts to 58%; and in a 10-year scenario, revenue growth has a 74% importance in overall value creation. Of course, statistics can be manipulated to support any point of view; yet, empirical evidence does allow a seat-of-the-pants benchmark to be set. While the future would continue seeing both philosophical and sociological questions on the relevance of placing wealth creation over social development, the fact is that till the time companies are set up by the moneys of shareholders, and till the time shareholders are given the status of being the owners, there is no way that in a capitalistic society, any CEO – a direct representative of shareholders – would dare to give less than the top priority to shareholders’ wealth creation. As a toast to that, we present to you India’s biggest wealth creators for the financial year 2010-11.
But then, that alone will not suffice. As a natural add on to a slow-growth economy, as we mentioned above, the companies are bound to feel the pressure on their bottomlines. Hence, a comprehensive and fluent pricing policy and equally good implementation of the same is of utmost importance. To keep their topline steady during the prevailing slow demand conditions, companies may get tempted to adopt a discounted price model, but in the long run, this could hurt them more as revenue, apparently, is the single most important driver of shareholder value maximisation. A research conducted on S&P 500 companies suggests that while in a 3-year horizon, revenue growth carries a 50% importance in overall value creation, in a 5-year horizon, it amounts to 58%; and in a 10-year scenario, revenue growth has a 74% importance in overall value creation. Of course, statistics can be manipulated to support any point of view; yet, empirical evidence does allow a seat-of-the-pants benchmark to be set. While the future would continue seeing both philosophical and sociological questions on the relevance of placing wealth creation over social development, the fact is that till the time companies are set up by the moneys of shareholders, and till the time shareholders are given the status of being the owners, there is no way that in a capitalistic society, any CEO – a direct representative of shareholders – would dare to give less than the top priority to shareholders’ wealth creation. As a toast to that, we present to you India’s biggest wealth creators for the financial year 2010-11.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
